Samsung Electronics Co., Ltd. May 9, 2008
1. Financial Highlights - Performance Sales (Parent) (Consolidated) 80 60 40 (Trillion KRW) 73.9 CAGR 9% 67.6 62.8 57.6 57.5 59.0 63.2 43.6 120 100 80 60 (Trillion KRW) 64.8 CAGR 12% 97.9 88.1 82.0 85.4 80.6 115.2 98.5 40 20 20 0 2003 2004 2005 2006 2007 FX Adjusted Sales by Business Unit 0 2003 2004 2005 2006 2007 FX Adjusted ROE & ROA 100% 75% 50% 25% 0% (Consolidated) 14% 9% 7% 7% 8% 22% 27% 25% 26% 24% 24% 11% 17% 29% 25% 23% 2003 2005 2007 LCD was included in Semi before 04 Others DA DM Telecom LCD Semi - 1-40% 30% 20% 10% 0% 34% 26% 22% 21% 19% 16% 16% 15% 15% 12% 2003 2004 2005 2006 2007 Average ROE Average ROA ROE ROA
2. Financial Highlights 100 80 60 40 20 0 ($bn) 40.4 7.7 9.3 16.1 CAGR 21.4% Assets (Consolidated) 52.5 9.1 12.1 22.8 61.5 9.0 13.2 28.8 76.4 10.0 19.3 36.3 87.7 11.9 22.9 39.8 7.2 8.4 10.4 10.9 13.1 Cash Balance A/R & Inventories PP & E Other Assets 100 80 60 40 20 0 ($bn) 4.8 10.7 24.8 Liabilities & Equity (Consolidated) 4.9 13.3 34.2 6.0 15.0 40.4 6.6 19.1 50.6 7.2 23.1 57.4 Debt Other Liabilities Total Equity '03 '04 '05 '06 '07 '03 '04 '05 '06 '07 (Billion $) (Consolidated Basis) 03 04 05 06 07 Cash Balance* 7.7 9.1 9.0 10.0 11.9 Total Equity 24.8 34.2 40.4 50.6 57.4 Net Debt / Equity -12% -12% -7% -7% -8% Return on Equity 22% 33% 20% 18% 15% Cash Balance = Cash + Cash equivalents + S-T S T Financial instruments + Marketable securities - 2 -
3. Cash Flow Management Disciplined Capex Spending Solid Free Cash Flow & Sizable Shareholders Return Strategic Investment 16 14 12 10 8 6 (US$ Bn) 5.6 6.0 9.1 7.4 11.5 15.8 9.9 8.0 13.0 10.8 7.5 13.6 13.7 9.0 6.3 Capex Operating Income EBITDA 4 2 0 03 04 05 06 07-3 -
4. Global Operation & #1 Products Well organized global operation networks - Overseas : 21 Production Sites, 13 R&D Centers, 41 Sales Subsidiaries (53,000 employees) - Domestic : 6 Production Sites (85,000 employees) 8 Global Leading Products DRAM 28.0% Flash 40.0% TFT LCD 23.1% FPTV 17.2% DDI 19.1% SRAM 28.0% HHP 14.5% Computer Monitor 14.7% - 4 -
Q1 Result & Q2 Outlook 1. Semiconductor 2. TFT-LCD 3. Telecommunication 4. Digital Media
Semiconductor: Q1 Result Analysis 100% 80% 60% 40% 20% 0% Quarterly DRAM Density Change Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 >1Gb 512Mb 256Mb (Source : isuppli, SEC) Q1 NAND Application Sales Growth Memory Weak pricing continued due to supply increase & seasonality DRAM - Slow PC demand due to weak seasonality : 11% QoQ - Faster transition from 512Mb to 1Gb amid weak DDR2 pricing & cost reduction needs resulting in bit growth increase (1Gb portion : 07 Q4 22% 08 Q1 44%, isuppli) - Oversupply continued due to steady increase of 12 capacity Yield improvement & increased 1Gb 68nm production contributed to further cost reduction NAND - Price declined due to weak seasonal demand Low seasonal demand for consumer products led by MP3P 8Gb MLC spot price declined by about 35% (QoQ) Growth (QoQ) CARD -8.6% USB -9.2% MP3P -6.5% DSC 1.7% Expansion of high density (16Gb 51nm) & differentiated products helped maintaining price premium Sys LSI (Source : DQ, SEC) Strong demand for DDI, smartcard chip, and CIS - Robust demand for mobile solutions - 5 -
Semiconductor: Q2 Outlook Growth Rate GB/sys Growth Rate 08 PC Shipment Q1 08 Q2 Q3 Q4 Total Shipment 69 69 75 83 297 8.0 6.0 4.0-11% 1.7-1% 1.9 (Unit : Mpcs, GB/sys) 9% 2.1 11% 2.3 10% 2.0 15% 12% 10% 9% 49% (Source : IDC, SEC) NAND Density Change by Product 07 08 (Unit : GB/sys) Memory Continuation of weak demand & global economy issue overhang DRAM - PC demand to remain sluggish due to low seasonality - Supply growth to continue for Q2 12 lines ramp-up and geometry migration to continue NAND - Typical slow season coupled with oversupply More vulnerable to possible US economic recession than DRAM Slowdown of MP3P and high-density card market to give downward pressure on demand - Concerns over new 12 capacity increase and channel inventory Reinforce market leadership through expansion of most advanced geometry and industry leading capex 2.0 0.0 CARDS HHP USB MP3P GPS DVC (Source : isuppli, SEC) Sys LSI Stable demand growth expected from DDI, Smart Card IC, and CIS - 6 -
TFT-LCD: Q1 Result Analysis SEC Large Panel Shipment 14.8 22.9 (Million units) 22.8 Large Panels Steady sales of Note PC & TV panels despite weak seasonality Large panel shipment: 07.Q4 22.9mn 08.Q1 22.8mn - Monitors : Weak seasonal demand - Note PCs : Steady sales of wide panels - TVs : Strong demand for TV panels resulting from new model launches by major TV set makers 1Q 07 4Q 07 1Q 08 Panel Price Trends Portion of 46+ panels : Approximately 25% of total LCD TV sales Panel pricing : IT - weak, TV- stable Achieved strong performance attributable to steady market demand of TV / Note PC panels and favorable exchange rate 07.Q4 08.Q1 Change Monitor (19 W) $138 $124 10% Small/ Mid Size Panels Note PC (15.4 W) TV (40 HD) $107 $98 8% $511 $509 1% (Source: DisplaySearch) Decrease in panel shipment due to weak seasonal demand and some slowdown of panel demand for handsets - 07.Q4 35.2mn 08.Q1 22.5mn (36% ) - 7 -
TFT-LCD: Q2 Outlook 08 Panel Demand Outlook (Unit: Million, Million m2) 08 Q1 Q2 2H HoH Monitor 45.7 46.6 100.2 9% Note PC 32.0 33.8 73.0 11% TV 24.1 26.4 62.9 25% Total 105.5 110.3 244.5 13% Area 15.8 16.9 39.1 20% (Source : DisplaySearch, SEC ) Area Breakdown (Market) Market Expect pull-in demand in preparation for peak season - IT Panel : Wide & large size panel portion expected to increase Possible slow-down in Note PC panel demand, resulting from component shortage (eg: batteries) - TV Panel : Expect TV set makers pull-in demand in preparation for Beijing Olympics Needs to monitor end market demands Set inventory sell-through & pull-in demand Samsung IT Panels : Focus on sales of strategic products LED- adopted, Wide, etc. 33% 33% 55% 53% 12% 14% Q4 07 Q1 08 (Source : DisplaySearch, SEC) TVs Note PCs Monitors TV Panels : Enhance our position in large size TV market through expansion of 40+ panel sales Portion of 40+ panel sales : over 60% Expect to expand sales of value- added products FHD, 120Hz, LED, etc. Small/mid-size : Expect shipment increase (15% QoQ) - 8 -
Telecommunication: Q1 Result Analysis 5.41 Revenue 6.62 6.65 (Trillion KRW) Handsets Handset sales of 46.3 mn units (33% YoY) Consolidated Parent - Market : Continued growth of emerging market sales amid weak demand in developed market 85% 81% 83% Increased portion of emerging market sales (China, India, etc.) - Domestic sales increased due to strong competition among operators in 3G market (42% QoQ) 1Q 07 4Q 07 1Q 08 34.8 8% 92% Shipment 46.3 5% 46.3 (Million units) 7% 95% 93% Domestic Overseas ASP: 07.Q4 $148 08.Q1 $141 - Overseas ASP declined due to weak seasonality Improved profitability due to cost reduction & currency effect - Decreased marketing expense and improved global SCM - Improved price competitiveness due to favorable exchange rate Network Domestic sales increase due to the expansion of WCDMA 1Q 07 4Q 07 1Q 08 network - 9 -
Telecommunication: Q2 Outlook Regional Demand Market 1.13 24.9% 15.7% 31.7% 1.23 23.5% 15.0% 33.5% (Billion units) Europe N.America Asia/MEA China ROW Moderate market growth expected for Q2 (4%~5% QoQ) - Export : Concern for global economy slow-down due to US financial crisis may decelerate market growth - Domestic : Demand to decrease slightly due to lower competition among operators Greater focus on premium market expected - New model launches and related marketing activities - Multimedia phone (3M~5M camera phone), 3G phone segments 15.2% 15.7% 12.5% 12.3% 07 08 (Source: Strategy Analytics) Samsung Launch of mid & high-end flagship models - Global launching of Soul phone (U900) - Reinforce mid & high-end line-up: 3G / High megapixel / Music phone - Strengthen premium product line-up (e.g. Haptic ) in domestic market Network: Expand domestic WCDMA network and supply Mobile WiMAX equipment for Sprint - 10 -
Digital Media: Q1 Result Analysis Digital Media Including overseas sales 22% 18% 14% 10% TV Market Share #2 #2 #1 #1 #1 #1 PDP-TV LCD-TV TV Total D/Search 3Q 07 4Q 07 1Q 8(E) Lower revenue due to the weak seasonality (15% QoQ) - KRW 8.68 trillion (4Q07) KRW 7.42 trillion (1Q08) Flat panel TV market demand decreased by 28% QoQ - Flat panel TV demand: 32M units (4Q 07) 23M (1Q 08) - Samsung : shipment decreased by 15% QoQ Expect further M/S gain Monitor shipment decreased in line with market trends ( Market demand 2% QoQ versus our shipment 3% ) - Continued growth in 20 + segment: 4.1M units (1Q 07) 8.5M(1Q 08) Laser printer sales increased by 15% QoQ mainly due to the shipment increase of color printers and multifunction printers Digital Appliances Slight revenue increase globally resulting from seasonal sales of air-conditioners - 11 -
Digital Media: Q2 Outlook LCD PDP CRT TV Market Forecast Laser Printer Market Color B&W 37 6 200 79 11 107 45% 208 105 13 89 (Unit : Million) 214 122 57% 64% 15 77 07 08 09 (DisplaySearch March 08) 40 7 31 33 35 (Unit : Million) 42 '07 '08 '09 8 (IDC Mar 08) Market Expect flat panel TV market demand to reach 118M units in 08 (30% YoY) - Demand growth driven by Olympic effect and lower prices - Continuous growth of the emerging market (40+ & Full HD segment) US financial crisis & economic slowdown may have negative impact on market growth Expect color laser printer and multifunction printer market to reach 7M units in 08 (16% YoY) - Market growth led by color laser & multifunction printers priced below $1,000 Samsung Flat panel TV target of 21 million units for 08 - Improvements in design, expansion of product line-up and distribution channels - Cost reduction through reinforced global SCM Expect sales increase of laser printers to corporate market - Expand laser printer line-up targeting corporate market Possible reduction in IT spending due to US economy slowdown - 12 -
Q & A